Online gaming likely to be categorised with sin goods for 40% GST levy
Online gaming is expected to be categorised in 40 per cent along with sin goods such as tobacco, official sources have indicated. Industry apprehends such a move risks mass closures, layoffs and a sharp decline in investor confidence, all of which could set the Indian gaming economy back by years.
After Prime Minister Narendra Modi’s announcement about reforms in GST, official sources said that Centre has proposed rate structure with continuation of special rates on gold, silver, unpolished diamond etc, two basic slab rate (5 and 18 per cent) and maximum applicable rate of 40 per cent on 5-7 sin goods to a Group of Ministers working on rate rationalisation. When asked specifically about online money gaming, a source said ”it could be under 40 per cent slab. However, the matter will first be considered by the Group of Ministers followed by fitment committee and finally by the GST Council.”
Final picture on new rate structure will emerge by October. At present, online gaming attracts GST at 28 per cent along with casinos and horse racing. Industry fears that this rate is already high, and further increase will lead to more disruptions. According to Anuraag Saxena, CEO of E-Gaming Federation, raising GST on real money gaming to 40 per cent would not just be a tax decision — it would fundamentally undermine a growing digital sector that has shown potential for job creation, innovation and responsible growth. While the government’s intent may be to regulate the space, equating online gaming with sin goods like tobacco and gutkha reflects a fundamental misunderstanding of the industry’s nature and value.
“Responsible gaming frameworks are already being developed and adopted by many platforms. What the sector needs is support for compliance, not a tax policy that stifles it entirely. Such a move risks mass closures, layoffs and a sharp decline in investor confidence, all of which could set the Indian gaming economy back by years,” said Saxena.
Earlier on July 11, 2023, the GST Council recommended 28 per cent GST will be applicable on the full value of the bets placed in the case of online gaming. Later on August 2, 2023, the Council recommended inserting a specific provision in the IGST Act 2017, to provide for liability to pay GST on the supply of online money gaming by a supplier located outside India to a person in India, for single registration in India for the said supplier through a simplified registration scheme and also for blocking of access by the public to any information generated, transmitted, received or hosted in any computer resource used for the supply of online money gaming by such a supplier in case of failure to comply with provisions of registration and payment of tax.
The Council also recommended that valuation of supply of online gaming may be done based on the amount paid or payable to or deposited with the supplier, by or on behalf of the player (excluding the amount entered into games/ bets out of winnings of previous games/ bets) and not on the total value of each bet placed. All these changes have been made effective from October 1, 2023.
